Price of Solar Declining Rapidly

If you’re looking to the bright future of photovoltaics for your facility or building, experts say you’re not going to have to wait long. Prices for photovoltaic power systems are dropping, and dropping fast.

The installed price of solar photovoltaic (PV) power systems in the United States fell substantially in 2011 and through the first half of 2012, according to the latest edition of Tracking the Sun, an annual PV cost-tracking report produced by the Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab).

The median installed price of residential and commercial PV systems completed in 2011 fell by roughly 11% to 14% from the year before, depending on system size, and, in California, prices fell by an additional 3% to 7% within the first six months of 2012. These recent installed price reductions are attributable, in large part, to dramatic reductions in PV module prices, which have been falling precipitously since 2008.

The report indicates that non-module costs—such as installation labor, marketing, overhead, inverters, and the balance of systems—have also fallen significantly over time. “The drop in non-module costs is especially important,” says report co-author Ryan Wiser of Berkeley Lab’s Environmental Energy Technologies Division, “as these costs can be most readily influenced by local, state, and national policies aimed at accelerating deployment and removing market barriers.”

According to the report, average non-module costs for residential and commercial systems declined by roughly 30% from 1998 to 2011, but have not declined as rapidly as module prices in recent years. As a result, non-module costs now represent a sizable fraction of the installed price of PV systems, and continued deep reduction in the price of PV will require concerted emphasis on lowering the portion of non-module costs associated with so-called “business process” or “soft” costs.

The report indicates that the median installed price of PV systems installed in 2011 was $6.10 per watt (W) for residential and small commercial systems smaller than 10 kilowatts (kW) in size and was $4.90/W for larger commercial systems of 100 kW or more in size. Utility-sector PV systems larger than 2,000 kW in size averaged $3.40/W in 2011. Report co-author Galen Barbose, also of Berkeley Lab, stresses the importance of keeping these numbers in context, noting that “these data provide a reliable benchmark for systems installed in the recent past, but prices have continued to decline over time, and PV systems being sold today are being offered at lower prices.”

Based on these data and on installed price data from other major international PV markets, the authors suggest that PV prices in the United States may be driven lower through large-scale deployment programs, but that other factors are also important in achieving installed price reductions.

The market for solar PV systems in the United States has grown rapidly over the past decade, as national, state and local governments offered various incentives to expand the solar market and accelerate cost reductions.